When looking for the right home for you, location and budget are of course going to be top of mind. When you have decided between condo vs. house, then it’s time to decide between turn-key vs. fixer-upper.
If you have a certain neighbourhood you want to buy into, sometimes “fixer-upper” homes are what you can afford. Or, you might be able to get a larger home with more bedrooms than other homes in the area if it needs some work. These types of homes are also a great opportunity for investment, since you are likely to make money in the long run if you renovate and improve the property (especially in a desirable area).
Before you decide to invest in a home that needs some TLC, ask yourself some of these questions about Buying a Fixer Upper:
What are you/are you NOT willing to take on?
There are varying levels of fixer-uppers. Some need new kitchens and bathrooms, some need walls torn down or basements finished. There are other homes that will require a complete renovation. These repairs can include foundation, plumbing, electrical, and more. See what these repairs will cost vs how much value they will add once they are all completed. Then, decide if taking on the repairs of the house is worth it to you.
Do you have the time and patience?
Renovations take time- more time than you probably guess they will. They are also loud, dirty, and take over your home. It is a VERY good idea to live off-site while the renovations are going on. If you’re doing a major renovation of the whole house, be prepared for it to take months or even a year. Planning to live with family or friends during this time will make the process less overwhelming. You can get some sleep and take a shower away from all the building materials and dust! Then, once you really move into your new home it will be completed and ready to live in.
What is your renovation budget?
When making an offer on a fixer-upper, consider how much money you need left for renovations. Make a list of what needs to be done and speak to professionals for estimates. Your realtor can also help you with this. You can consider offering less, based on larger repairs that will be needed such as electrical issues or foundation repairs so that you can have more of a cushion in your budget.
Also, remember to factor in a contingency to your budget in case of unexpected issues (and with older homes these are common). It’s better to over-estimate the costs than wind up running out of money part-way through a reno!
Are you buying as an investment or as a home?
Do you plan to put in the
work on the house in order to sell it for a profit? If this is the case, you
will want a house in a desirable location that is listed for quite a bit less
than what other homes in the area are selling for (Think “worst house on the
best street”). You will also want to take on projects that take a shorter
amount of time while adding significant value, instead of fixing something that costs a lot and not really add much value. For example, an addition will take a lot of time and money and in some areas does not really add value. An addition can actually price a home out of it's area and cause it to sit on the market longer. If Toronto buyers can get a home in the same area (full of bungalows) for $300k less than your larger house, they probably will. Talk to your realtor about how much value a renovation will actually add before taking it on.
If you’re buying as a home for yourself, there will be things you want to renovate for your needs, not just for potential resale down the line. You might not mind buying a home that you would add an addition on if it’s in the right school district, for example. You might also be willing to put in more time to the renovation to get the final product perfect for you.
Are you hiring professionals, doing it yourself, or both?
If you are skilled at renovations, there might be some things you want to do yourself. If you answered “Yes” to “Do I have time and patience?” and you are handy with home renovation projects, a fixer-upper might be a great investment for you. However, some fixes are still best left to the pros. You may have seen houses with dangerous electrical work or plumbing that caused flooding damage. This was probably done by someone who was NOT a professional. These important renovations should be handled by pros, since if they are done wrong they will actually decrease the value your property. You’ll be more secure knowing everything inside the walls has been done right.
Or, of course, you can hire professionals to do it all. Renos are stressful enough, without you doing it after work and having them take over your life completely. Spending the money up front will be worth it in the end, when the entire house is done…and done well. The difference between DIY and professional work is noticeable, to you and any future buyers. Think about how quality work will add not just style, but value.
Tip: Hire a designer. That way they can make sure your vision is carried out, is done well and looks amazing!
Finally: Can you handle stress?
While a fixer-upper is a wise investment, you have to know that things will go wrong and issues will pop up. If you’re the kind of person who falls apart over stressful scenarios (be honest with yourself!) then turn-key would probably be a better choice. If you can handle stress, still ask yourself: Is this a good time in my life to take on a major project? If you just had a baby or are starting a new job, renovations will add too much to your plate. Make sure you have not just the time, but the mental energy to take on a roller coaster ride. If you are ready, know there will be stressful times but it will pay off in the end!
Ready to take on a fixer-upper? Contact The Armstrong Team for advice about where to buy great fixer-uppers in Toronto.
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